Tran Lee plans to set aside $2,500 a year, at the end of each of the next two years (year 1 and year 2), then $4,500 a year in the following two years (year 3 and year 4), and increase his annual savings to $8,500 in year 5 and year 6

Finance Aug 14, 2020

Tran Lee plans to set aside $2,500 a year, at the end of each of the next two years (year 1 and year 2), then $4,500 a year in the following two years (year 3 and year 4), and increase his annual savings to $8,500 in year 5 and year 6. His savings will earn 6% per annum. What would be the accumulated future value of this savings amount if interest is paid annually? All the money will be withdrawn at the end of year 7.

Expert Solution

The future value = $34,427.53

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